Oct 19 2008
What You May Not Realize About Foreclosures
Rent Free Living
Most people mistakenly believe that foreclosure should be avoided at all costs. However, the truth is that foreclosure can be your best option in certain cases. Some homeowners will attempt to complete short sales and deeds in lieu of foreclosure, and that may be their best option, but the foreclosure process is a very slow one which will allow the homeowner to live rent free for as long as they are able to manipulate the system to their benefit.
Evictions
Some borrowers believe that the sheriff will forcibly throw them out on the street once foreclosure proceedings start. In actuality, foreclosure proceedings typically take several months from the time you first receive notice of your default and the time your home is put up for sale at a public auction. Even then, the new owner must follow state legal procedures to evict you, which requires at least some notice (sometimes up to another couple of months) and a court order.
Short Sales
While many homeowners will attemp to complere a short sale, they dont fully understand the consequences of one. A short sale occurs when you convince your lender to let you sell the property for less than you owe on it. The problem is that you have to move out upon the close of escrow, and you therefore give up the opportunity to live in the house for many more months, payment free. Also, you may be forced to pay taxes on the difference between the amount owed to the bank and the short sale amount since the IRS recognizes this difference as a capital gain.
Loss Mitigation
Once foreclosure proceedings have begun, negotiations with your lender must be successful prior to the date set for the foreclosure sale. Lenders often state right up until the date of a scheduled foreclosure sale that the negotiations are on track, and then pull out at the last moment. This isn’t necessarily a deliberate tactic. Rather, it may be a sign of disorganization as the left hand rarely knows what the right hand is doing. You should always be prepared to use the legal system to your benefit as opposed to waiting for the bank to do you any favors.
Learn more about all of these topics and more at www.ForeclosureDefenseSecrets.com.
